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Sunday, July 12, 2009

Integrity of Technical Analysis

Along the lines of my earlier CFD Integrity post Eric Weinstein's Talk at a recent conference about Economic Crises addresses some of the problems that someone committed to scientific integrity has in dealing with decision makers. His main topic is a more rigorous connection between mathematicians / physicist and economists / decision makers. Of course the connection is the similar math-tools that both groups use, and the improved tools that economists could benefit from by becoming more closely related to the physicists.

One of the problems that he talks about early on is that those highly committed to scientific integrity never even get invited to the table. The goals of decision makers, in an economic crisis for example, may not be focused on discovering the truth, but on enhancing "confidence" in the market. In these instances the normal devotion to transparency and brutal honesty are undesireable by the decision makers. Brutal honesty is rarely conducive to mollifying constituencies (at least in the short-term).

This is our challenge: to tell the truth to power with love. We have to maintain the commitment to scientific integrity described by Feynman when talking to the decision makers (laymen). But to do what we have to to be at the table. Fighting the stereotype of the arrogant, unapproachable scientist / engineer is part of the solution as much as improved technical tools.

In commenting on the benefits of closer connection of biological ideas with economics Weinstein states that lying actors don't necessarily get removed from the market auto-magically by some invisible hand: "It is the case that maybe all truth that we generate is initially constructed only as camouflage for the few lies we really want to tell." The illustration he uses comes from wasp pseudocopulation.

As he wraps up: "The barbarity of the market is unquestionable," echos of the Law for Wolves.